Exhibit 99.2
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Associated Estates Realty Corporation
First Quarter 2010
Earnings Release and Supplemental Financial Data
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Cypress Shores is located within the planned community of Coconut Creek, one and a half miles from the Florida Turnpike and four miles from I-95, which allows for an easy commute to West Palm Beach, Fort Lauderdale and Boca Raton. This community's extensive amenities package includes nature preserve views, swimming pool, hot tub, lighted tennis courts, sand volleyball court, recreation center with kitchen and big-screen television, clubhouse, business center, picnic area with grills and more.
Cypress Shores |
| Phone: | (954) 970-5000 |
1901 Lyons Road |
| Fax: | (954) 979-9002 |
Coconut Creek, FL 33063 |
| Web Site: | www.cypressshoresapts.com |
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Investor Contact: |
| Investor Contact: |
| Media Contact: |
Swarup Katuri |
| Jeremy Goldberg |
| Kimberly Kanary |
Senior Director of Corporate Finance |
| Senior Director of Corporate Finance |
| Director of Corporate Communications |
and Investor Relations |
| and Investor Relations |
| (216) 797-8718 |
(216) 797-8743 |
| (216) 797-8715 |
| kkanary@AssociatedEstates.com |
skaturi@AssociatedEstates.com |
| jgoldberg@AssociatedEstates.com |
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www.AssociatedEstates.com |
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Associated Estates Realty Corporation |
Table of Contents | Page |
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Reconciliation of Funds from Operations (FFO) and Funds Available for Distribution (FAD) | 10 |
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11 | |
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Overview of Operating Expenses Related to Repairs and Maintenance and Capitalized |
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Expenditures | 12 |
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Fees, Reimbursements and Other Revenue, Direct Property Management and Service Company |
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Expense and General and Administrative Expense | 13 |
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"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This news release contains forward-looking statements based on current judgments and knowledge of management, which are subject to certain risks, trends and uncertainties that could cause actual results to vary from those projected, including but not limited to, expectations regarding the Company's 2010 performance, which are based on certain assumptions. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this news release. These forward-looking statements are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "expects," "projects," "believes," "plans," "anticipates" and similar expressions are intended to identify forward-looking statements. Investors are cautioned that the Company's forward-looking statements involve risks and uncertainty that could cause actual results to differ from estimates or projections contained in these forward-looking statements, including without limitation the following: changes in the economic climate in the markets in which the Company owns and manages properties, including interest rates, the overall level of economic activity, the availability of consumer credit and mortgage financing, unemployment rates and other factors; the ability of the Company to refinance debt on favorable terms at maturity; risks of a lessening of demand for the multifamily units owned or managed by the Company; competition from other available multifamily units and changes in market rental rates; increases in property and liability insurance costs; unanticipated increases in real estate taxes and other operating expenses; weather conditions that adversely affect operating expenses; expenditures that cannot be anticipated such as utility rate and usage increases, unanticipated repairs and real estate tax valuation reassessments or millage rate increases; inability of the Company to control operating expenses or achieve increases in revenue; ownership limitations on our common and preferred shares that may discourage a takeover otherwise considered favorably by shareholders; the results of litigation filed or to be filed against the Company; changes in tax legislation; risks of personal injury claims and property damage related to mold claims because of diminished insurance coverage; catastrophic property damage losses that are not covered by the Company's insurance; the ability to acquire properties at prices consistent with the Company’s investment criteria; risks associated with property acquisitions such as environmental liabilities, among others; changes in or termination of contracts relating to third party management and advisory business; risks related to the perception of residents and prospective residents as to the attractiveness, convenience and safety of the Company's properties or the neighborhoods in which they are located; and construction business risks. |
2 |
Associated Estates Realty Corporation |
ASSOCIATED ESTATES REALTY CORPORATION REPORTS FIRST QUARTER RESULTS
Company Reaffirms Full-Year FFO Guidance
Quarter-End Occupancy 95.3%
Cleveland, Ohio – April 26, 2010 – Associated Estates Realty Corporation (NYSE: AEC) (NASDAQ: AEC) today reported funds from operations (FFO) for the first quarter ended March 31, 2010 of $0.20 per common share (basic and diluted), compared with $0.36 per common share (basic and diluted), for the first quarter ended March 31, 2009. FFO as adjusted for the first quarter of 2010 was $0.18 per common share (basic and diluted) after adjusting for a credit to expense of $554,000 or approximately $0.02 per common share for a refund of defeasance costs on certain previously defeased loans. FFO as adjusted for the first quarter of 2009 was $0.32 per common share (basic and diluted) after adjusting for a credit to expense of $563,000 or $0.04 per common share.
Net loss applicable to common shares was $4.0 million or $0.19 per common share (basic and diluted) for the first quarter ended March 31, 2010, compared with net loss applicable to common shares of $936,000 or $0.06 per common share (basic and diluted) for the first quarter ended March 31, 2009. The March 31, 2009 results include $0.14 per share (basic and diluted) for gains on the disposition of one property.
Total revenue for the first quarter 2010 was $33.0 million compared with $32.4 million for the first quarter 2009.
“Our quarter end occupancy was a solid 95 percent. Our first quarter results are right in line with our budgets and our 2010 guidance. This strong performance is the result of a well positioned portfolio and improving market conditions,” said Jeffrey I. Friedman, president and chief executive officer.
A reconciliation of net (loss) income attributable to the Company to FFO, and to FFO as adjusted, is included on page 10.
Same Community Portfolio Results
Net operating income (NOI) for the first quarter for the Company’s same community portfolio decreased 1.9 percent as a result of revenue decreasing 0.6 percent and property operating expenses increasing 1.2 percent, compared with the first quarter of 2009. Physical occupancy was 95.3 percent at the end of the first quarter as compared with 93.9 percent at the end of the first quarter of 2009. Average net rent collected per unit for the first quarter for the same community properties was basically flat at $844 per month compared with the first quarter of 2009. Net rent collected per unit for the first quarter for the Company’s same community Midwest portfolio decreased 0.9 percent to $771 and net collected rent per unit for the Company’s same community Mid-Atlantic portfolio grew 0.3 percent to $1,155, while net rent collected per unit for the Company’s same community properties in the Southeast markets increased 0.6 percent to $879.
Additional quarterly financial information, including performance by region for the Company's portfolio, is included on pages 14 through 18.
Equity and Debt Financing
On January 15, 2010, the Company announced that it had completed the sale of 5,175,000 common shares resulting in net proceeds of approximately $54.9 million.
As of March 31, 2010, the Company had $20.4 million outstanding on its $150.0 million unsecured revolving credit facility. For the remainder of 2010, the Company has one remaining debt maturity of $21.0 million, which it intends to repay with proceeds from anticipated refinancing activity.
3 |
Associated Estates Realty Corporation |
2010 Outlook
The Company has reaffirmed its current full year FFO as adjusted guidance range of $0.86 to $0.92 per common share. Detailed assumptions relating to the Company's earnings guidance can be found on page 20.
Conference Call
A conference call to discuss the results will be held on Tuesday, April 27 at 2:00 p.m. Eastern. To participate in the call:
Via Telephone: The dial-in number is 800-860-2442, and the passcode is “Estates.”
Via the Internet (listen only): Access the Company's website at www.AssociatedEstates.com. Please log on at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. Select the "Q1 2010 Earnings Webcast" link. The webcast will be archived through May 11, 2010.
4 |
Associated Estates Realty Corporation |
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| Three Months Ended | ||||
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| March 31, | ||||
OPERATING INFORMATION |
| 2010 |
| 2009 | ||
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Total revenue |
| $ | 32,956 |
| $ | 32,388 |
Property revenue |
| $ | 31,646 |
| $ | 31,824 |
Net (loss) income applicable to common shares |
| $ | (3,956) |
| $ | (936) |
Per share - basic and diluted |
| $ | (0.19) |
| $ | (0.06) |
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Funds from Operations (FFO) (1) |
| $ | 4,267 |
| $ | 5,878 |
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FFO as adjusted (1) |
| $ | 3,713 |
| $ | 5,315 |
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FFO per share - basic and diluted |
| $ | 0.20 |
| $ | 0.36 |
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FFO as adjusted per share - basic and diluted |
| $ | 0.18 |
| $ | 0.32 |
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Funds Available for Distribution (FAD) (1) |
| $ | 3,271 |
| $ | 4,653 |
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Dividends per share |
| $ | 0.17 |
| $ | 0.17 |
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Payout ratio - FFO |
| 85.0% |
| 47.2% | ||
Payout ratio - FFO as adjusted |
| 94.4% |
| 53.1% | ||
Payout ratio - FAD |
| 113.3% |
| 60.7% | ||
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General and administrative expense |
| $ | 3,705 |
| $ | 3,140 |
Interest expense (2) |
| $ | 8,233 |
| $ | 8,429 |
Interest coverage ratio (3) |
| 1.59:1 |
| 1.77:1 | ||
Fixed charge coverage ratio (4) |
| 1.42:1 |
| 1.59:1 | ||
General and administrative expense to property revenue |
| 11.7% |
| 9.9% | ||
Interest expense to property revenue |
| 26.0% |
| 26.5% | ||
Property NOI (5) |
| $ | 17,722 |
| $ | 18,070 |
ROA (6) |
| 7.8% |
| 8.1% | ||
Same Community revenue decrease |
| (0.6)% |
| (0.3)% | ||
Same Community expense increase |
| 1.2% |
| 4.0% | ||
Same Community NOI decrease |
| (1.9)% |
| (3.4)% | ||
Same Community operating margins |
| 56.0% |
| 56.8% | ||
(1) | See page 10 for a reconciliation of net (loss) income attributable to AERC to these non-GAAP measurements and page 21 for the Company's definition of these non-GAAP measurements. |
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(2) | Excludes amortization of financing fees of $382 for 2010 and $317 for 2009. 2010 excludes a credit of $(554) and 2009 excludes a credit of $(563) for refunds of defeasance costs for previously defeased loans. |
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(3) | Is calculated as EBITDA divided by interest expense, including capitalized interest and amortization of deferred financing costs and excluding defeasance and/or other prepayment costs/credits. Individual line items in this calculation include results from discontinued operations where applicable. See page 22 for a reconciliation of net (loss) income available to common shares to EBITDA and for the Company's definition of EBITDA. |
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(4) | Represents interest expense and preferred stock dividend payment coverage, excluding defeasance and/or other prepayment costs/credits. Individual line items in this calculation include discontinued operations where applicable. |
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(5) | See page 23 for a reconciliation of net (loss) income attributable to AERC to this non-GAAP measurement and for the Company's definition of this non-GAAP measurement. |
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(6) | ROA is calculated as trailing twelve month Property NOI divided by average gross real estate assets, excluding held for sale assets. |
5 |
Associated Estates Realty Corporation |
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| March 31, |
| December 31, | ||
MARKET CAPITALIZATION DATA |
| 2010 |
| 2009 | ||
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Net real estate assets |
| $ | 633,304 |
| $ | 638,535 |
Total assets |
| $ | 657,136 |
| $ | 662,505 |
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Debt |
| $ | 475,639 |
| $ | 525,836 |
Noncontrolling redeemable interest |
| $ | 1,829 |
| $ | 1,829 |
Preferred stock - 8.70% Class B Cumulative Redeemable Preferred Shares |
| $ | 48,263 |
| $ | 48,263 |
Total shareholders' equity |
| $ | 149,505 |
| $ | 99,440 |
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Common shares outstanding |
| 22,349 |
| 16,676 | ||
Share price, end of period |
| $ | 13.79 |
| $ | 11.27 |
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Total market capitalization |
| $ | 832,095 |
| $ | 762,038 |
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Undepreciated book value of real estate assets |
| $ | 943,550 |
| $ | 940,643 |
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Debt to undepreciated book value of real estate assets |
| 50.4% |
| 55.9% | ||
Debt and preferred stock to undepreciated book value of real estate assets |
| 55.5% |
| 61.0% | ||
Debt to total market capitalization |
| 57.2% |
| 69.0% | ||
Debt and preferred stock to total market capitalization |
| 63.0% |
| 75.3% | ||
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Annual dividend |
| $ | 0.68 |
| $ | 0.68 |
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Annual dividend yield based on share price, end of period |
| 4.9% |
| 6.0% | ||
6 |
Associated Estates Realty Corporation |
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| Average Age |
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| Number |
| of Owned |
PORTFOLIO INFORMATION |
| Properties |
| of Units |
| Properties |
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Company Portfolio: |
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Directly Owned: |
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Same Community Midwest |
| 34 |
| 7,648 |
| 18 |
Same Community Mid-Atlantic |
| 6 |
| 1,471 |
| 13 |
Same Community Southeast |
| 8 |
| 2,989 |
| 14 |
Total Same Community |
| 48 |
| 12,108 |
| 16 |
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Third Party Managed |
| 1 |
| 258 |
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Total Company Portfolio |
| 49 |
| 12,366 |
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7 |
Associated Estates Realty Corporation |
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| March 31, |
| December 31, | ||
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| 2010 |
| 2009 | ||
ASSETS |
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Real estate assets |
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Investment in real estate |
| $ | 937,221 |
| $ | 935,846 |
Construction in progress |
| 6,329 |
| 4,797 | ||
Less: accumulated depreciation |
| (310,246) |
| (302,108) | ||
Real estate, net |
| 633,304 |
| 638,535 | ||
Cash and cash equivalents |
| 3,461 |
| 3,600 | ||
Restricted cash |
| 7,012 |
| 7,093 | ||
Other assets |
| 13,359 |
| 13,277 | ||
Total assets |
| $ | 657,136 |
| $ | 662,505 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Mortgage notes payable |
| $ | 429,459 |
| $ | 487,556 |
Unsecured revolving credit facility |
| 20,400 |
| 12,500 | ||
Unsecured debt |
| 25,780 |
| 25,780 | ||
Total debt |
| 475,639 |
| 525,836 | ||
Accounts payable, accrued expenses and other liabilities |
| 30,163 |
| 35,400 | ||
Total liabilities |
| 505,802 |
| 561,236 | ||
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Noncontrolling redeemable interest |
| 1,829 |
| 1,829 | ||
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Shareholders' equity |
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Preferred shares, without par value; 9,000,000 shares authorized; 8.70% |
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Class B Series II cumulative redeemable, $250 per share liquidation |
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preference, 232,000 issued and 193,050 outstanding |
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at March 31, 2010 and December 31, 2009, respectively |
| 48,263 |
| 48,263 | ||
Common shares, without par value; $.10 stated value; 41,000,000 |
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authorized; 28,170,763 issued and 22,349,302 outstanding at |
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March 31, 2010 and 22,995,763 issued and 16,675,826 outstanding |
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at December 31, 2009, respectively |
| 2,817 |
| 2,300 | ||
Paid-in capital |
| 339,928 |
| 283,090 | ||
Accumulated distributions in excess of accumulated net income |
| (177,506) |
| (168,822) | ||
Accumulated other comprehensive loss |
| (503) |
| (1,420) | ||
Less: Treasury shares, at cost, 5,821,461 and 6,319,937 shares |
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at March 31, 2010 and December 31, 2009, respectively |
| (63,494) |
| (63,971) | ||
Total shareholders' equity |
| 149,505 |
| 99,440 | ||
Total liabilities and shareholders' equity |
| $ | 657,136 |
| $ | 662,505 |
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8 |
Associated Estates Realty Corporation |
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| Three Months Ended | ||||
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| March 31, | ||||
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| 2010 |
| 2009 | ||
REVENUE |
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Property revenue |
| $ | 31,646 |
| $ | 31,824 |
Management and service company revenue: |
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Fees, reimbursements and other |
| 207 |
| 468 | ||
Construction and other services |
| 1,103 |
| 96 | ||
Total revenue |
| 32,956 |
| 32,388 | ||
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EXPENSES |
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Property operating and maintenance |
| 13,924 |
| 13,754 | ||
Depreciation and amortization |
| 8,620 |
| 9,207 | ||
Direct property management and service company expense |
| 132 |
| 359 | ||
Construction and other services |
| 1,416 |
| 213 | ||
General and administrative |
| 3,705 |
| 3,140 | ||
Total expenses |
| 27,797 |
| 26,673 | ||
Operating income |
| 5,159 |
| 5,715 | ||
Interest income |
| 9 |
| 15 | ||
Interest expense |
| (8,061) |
| (8,183) | ||
(Loss) income from continuing operations |
| (2,893) |
| (2,453) | ||
Income from discontinued operations: |
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Operating income |
| - |
| 302 | ||
Gain on disposition of properties |
| - |
| 2,278 | ||
Income from discontinued operations |
| - |
| 2,580 | ||
Net (loss) income |
| (2,893) |
| 127 | ||
Net income attributable to noncontrolling redeemable interest |
| (13) |
| (14) | ||
Net (loss) income attributable to AERC |
| (2,906) |
| 113 | ||
Preferred share dividends |
| (1,050) |
| (1,049) | ||
Net (loss) income applicable to common shares |
| $ | (3,956) |
| $ | (936) |
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Earnings per common share - basic and diluted: |
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(Loss) income from continuing operations |
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applicable to common shares |
| $ | (0.19) |
| $ | (0.21) |
Income from discontinued operations |
| - |
| 0.15 | ||
Net (loss) income applicable to common shares |
| $ | (0.19) |
| $ | (0.06) |
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Weighted average shares outstanding - basic and diluted |
| 21,199 |
| 16,434 | ||
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9 |
Associated Estates Realty Corporation |
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| Three Months Ended | ||||
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| March 31, | ||||
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| 2010 |
| 2009 | ||
CALCULATION OF FFO AND FAD |
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Net (loss) income attributable to AERC |
| $ | (2,906) |
| $ | 113 | |
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Add: | Depreciation - real estate assets |
| 8,223 |
| 8,255 | ||
| Amortization of intangible assets |
| - |
| 837 | ||
Less: | Preferred share dividends |
| (1,050) |
| (1,049) | ||
| Gain on disposition of properties |
| - |
| (2,278) | ||
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| Funds from Operations (FFO) (1) |
| 4,267 |
| 5,878 | ||
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Less: | Refund of defeasance costs for previously defeased loans |
| (554) |
| (563) | ||
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| Funds from Operations as Adjusted (1) |
| 3,713 |
| 5,315 | ||
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Add: | Depreciation - other assets |
| 397 |
| 374 | ||
| Amortization of deferred financing fees |
| 382 |
| 322 | ||
Less: | Recurring fixed asset additions (2) |
| (1,221) |
| (1,358) | ||
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| Funds Available for Distribution (FAD) (1) |
| $ | 3,271 |
| $ | 4,653 |
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Weighted average shares outstanding - basic and diluted (3) |
| 21,199 |
| 16,434 | |||
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PER SHARE INFORMATION: |
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FFO - basic and diluted |
| $ | 0.20 |
| $ | 0.36 | |
FFO as adjusted - basic and diluted |
| $ | 0.18 |
| $ | 0.32 | |
Dividends |
| $ | 0.17 |
| $ | 0.17 | |
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Payout ratio - FFO |
| 85.0% |
| 47.2% | |||
Payout ratio - FFO as adjusted | 94.4% |
| 53.1% | ||||
Payout ratio - FAD |
| 113.3% |
| 60.7% | |||
(1) | See page 21 for the Company's definition of these non-GAAP measurements. Individual line items included in FFO and FAD calculation include results from discontinued operations where applicable. |
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(2) | Fixed asset additions exclude development, investment and non-recurring capital additions. |
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(3) | The Company has excluded 495 common share equivalents from the three months ended March 31, 2010 calculation, respectively, and 146 common share equivalents from the three months ended March 31, 2009 calculation, respectively, used in the computation of earnings per share and FFO per share, as they would be anti-dilutive to the loss from continuing operations. |
10 |
Associated Estates Realty Corporation |
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| Three Months Ended | ||||
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| March 31, | ||||
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| 2010 |
| 2009 | ||
REVENUE |
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Property revenue |
| $ | - |
| $ | 1,096 |
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EXPENSES |
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Property operating and maintenance |
| - |
| 505 | ||
Depreciation and amortization |
| - |
| 259 | ||
Total expenses |
| - |
| 764 | ||
Operating income |
| - |
| 332 | ||
Interest income |
| - |
| - | ||
Interest expense |
| - |
| (30) | ||
Gain on disposition of properties |
| - |
| 2,278 | ||
Income from discontinued operations |
| $ | - |
| $ | 2,580 |
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(1) | The Company reports the results of operations and gain/loss related to the sale of real estate assets as discontinued operations. Real estate assets that are classified as held for sale are also reported as discontinued operations. The Company generally classifies properties held for sale when all significant contingencies surrounding the closing have been resolved. In many transactions, these contingencies are not satisfied until the actual closing of the transaction. Interest expense included in discontinued operations is limited to interest on mortgage debt specifically associated with properties sold or classified as held for sale. |
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| Included in the table above are two properties disposed of in 2009. |
11 |
Associated Estates Realty Corporation |
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| Three Months Ended | ||||
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| Estimated |
| March 31, 2010 | ||||
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| GAAP Useful |
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| Cost Per | ||
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| Life (Years) |
| Amount |
| Unit (1) | ||
OPERATING EXPENSES RELATED TO REPAIRS AND MAINTENANCE |
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Repairs and maintenance (2) |
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| $ | 2,132 |
| $ | 176 |
Maintenance personnel labor cost (2) |
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| 1,380 |
| 114 | ||
Total Operating Expenses Related to Repairs and Maintenance |
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| 3,512 |
| 290 | ||
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CAPITAL EXPENDITURES |
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Recurring Capital Expenditures (3) |
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Amenities |
| 5 |
| 81 |
| 7 | ||
Appliances |
| 5 |
| 225 |
| 19 | ||
Building improvements |
| 14 |
| 54 |
| 5 | ||
Carpet and flooring |
| 5 |
| 601 |
| 50 | ||
Furnishings |
| 5 |
| 5 |
| - | ||
HVAC and mechanicals |
| 15 |
| 151 |
| 12 | ||
Landscaping and grounds |
| 14 |
| 18 |
| 1 | ||
Suite improvements |
| 5 |
| 28 |
| 2 | ||
Total Recurring Capital Expenditures - Properties |
|
|
| 1,163 |
| 96 | ||
Corporate capital expenditures (4) |
|
|
| 58 |
| 5 | ||
Total Recurring Capital Expenditures |
|
|
| 1,221 |
| 101 | ||
Total Recurring Capital Expenditures and Repairs and Maintenance |
|
|
| $ | 4,733 |
| $ | 391 |
|
|
|
|
|
|
| ||
Total Recurring Capital Expenditures |
|
|
| $ | 1,221 |
|
| |
Investment/Revenue Enhancing/Non-Recurring Expenditures (5) |
|
|
|
|
|
| ||
Building improvements - unit upgrades |
| Various |
| 18 |
|
| ||
Building improvements - other |
| 20 |
| 54 |
|
| ||
Corporate office renovations |
|
|
| 9 |
|
| ||
Total Investment/Revenue Enhancing/Non-Recurring Expenditures |
|
|
| 81 |
|
| ||
|
|
|
|
|
|
| ||
Grand Total Capital Expenditures |
|
|
| $ | 1,302 |
|
| |
|
|
|
|
|
|
| ||
(1) | Calculated using weighted average units owned during the three months ended March 31, 2010 of 12,108. |
|
|
(2) | Included in property operating and maintenance expense in the Consolidated Statements of Operations. |
|
|
(3) | See page 23 for the Company's definition of recurring fixed asset additions. |
|
|
(4) | Includes upgrades to computer hardware and software as well as corporate office furniture and fixtures. |
|
|
(5) | See page 23 for the Company's definition of investment/revenue enhancing and/or non-recurring fixed asset additions. |
|
|
12 |
Associated Estates Realty Corporation |
|
|
| Three Months Ended | ||||
|
|
| March 31, | ||||
|
|
| 2010 |
| 2009 | ||
Fees, Reimbursements and Other Revenue |
|
|
|
| |||
Property management fees |
| $ | 20 |
| $ | 61 | |
Asset management fees |
| 48 |
| 49 | |||
Other revenue |
| 74 |
| 108 | |||
Payroll reimbursements(1) |
| 65 |
| 250 | |||
Fees, Reimbursements and Other Revenue(2) |
| 207 |
| 468 | |||
|
|
|
|
|
| ||
Direct Property Management and Service Company Expense |
|
|
|
| |||
Service company allocations |
| 67 |
| 109 | |||
Payroll reimbursements(1) |
| 65 |
| 250 | |||
Direct Property Management and Service Company Expense(2) |
| 132 |
| 359 | |||
Service Company NOI |
| $ | 75 |
| $ | 109 | |
|
|
|
|
|
| ||
|
|
|
|
|
| ||
General and Administrative and Service Company Expense |
|
|
|
| |||
General and administrative expense(2) |
| $ | 3,705 |
| $ | 3,140 | |
Service company allocations |
| 67 |
| 109 | |||
General and Administrative and Service Company Expense |
| $ | 3,772 |
| $ | 3,249 | |
|
|
|
|
|
| ||
(1) | Salaries and benefits reimbursed in connection with the management of properties for third parties. |
|
|
(2) | As reported per the Consolidated Statement of Operations. |
13 |
Associated Estates Realty Corporation |
|
| Quarter Ended | |||||||||||||
|
| March 31, |
| December 31, |
| September 30, |
| June 30, |
| March 31, | |||||
|
| 2010 |
| 2009 |
| 2009 |
| 2009 |
| 2009 | |||||
|
|
|
|
|
|
|
|
|
|
| |||||
Property Revenue |
| $ | 31,646 |
| $ | 31,756 |
| $ | 32,255 |
| $ | 32,138 |
| $ | 31,824 |
|
|
|
|
|
|
|
|
|
|
| |||||
Property Operating and |
|
|
|
|
|
|
|
|
|
| |||||
Maintenance Expenses |
|
|
|
|
|
|
|
|
|
| |||||
Personnel |
| 3,870 |
| 3,687 |
| 3,686 |
| 3,798 |
| 3,738 | |||||
Advertising |
| 365 |
| 380 |
| 385 |
| 400 |
| 392 | |||||
Utilities |
| 1,898 |
| 1,765 |
| 1,851 |
| 1,686 |
| 1,812 | |||||
Repairs and maintenance |
| 2,132 |
| 1,863 |
| 2,417 |
| 2,463 |
| 2,211 | |||||
Real estate taxes and insurance |
| 4,540 |
| 4,398 |
| 4,494 |
| 4,332 |
| 4,515 | |||||
Other operating |
| 1,119 |
| 1,143 |
| 1,166 |
| 1,132 |
| 1,086 | |||||
Total Expenses |
| 13,924 |
| 13,236 |
| 13,999 |
| 13,811 |
| 13,754 | |||||
|
|
|
|
|
|
|
|
|
|
| |||||
Property Net Operating Income |
| $ | 17,722 |
| $ | 18,520 |
| $ | 18,256 |
| $ | 18,327 |
| $ | 18,070 |
|
|
|
|
|
|
|
|
|
|
| |||||
Operating Margin |
| 56.0% |
| 58.3% |
| 56.6% |
| 57.0% |
| 56.8% | |||||
|
|
|
|
|
|
|
|
|
|
| |||||
Total Number of Units |
| 12,108 |
| 12,108 |
| 12,108 |
| 12,108 |
| 12,108 | |||||
|
|
|
|
|
|
|
|
|
|
| |||||
NOI Per Unit |
| $ | 1,464 |
| $ | 1,530 |
| $ | 1,508 |
| $ | 1,514 |
| $ | 1,492 |
|
|
|
|
|
|
|
|
|
|
| |||||
Average Net Rents Per Unit (1) |
| $ | 906 |
| $ | 912 |
| $ | 917 |
| $ | 920 |
| $ | 926 |
|
|
|
|
|
|
|
|
|
|
| |||||
Average Net Rent Collected Per Unit (2) | $ | 844 |
| $ | 848 |
| $ | 858 |
| $ | 855 |
| $ | 847 | |
|
|
|
|
|
|
|
|
|
|
| |||||
Physical Occupancy - End of Period (3) | 95.3% |
| 93.9% |
| 94.6% |
| 95.4% |
| 93.9% | ||||||
|
|
|
|
|
|
|
|
|
|
| |||||
(1) | Represents gross potential rents less concessions. |
|
|
(2) | Represents gross potential rents less vacancies and concessions. |
|
|
(3) | Is defined as number of units occupied divided by total number of units. |
14 |
Associated Estates Realty Corporation |
|
|
|
|
|
| Net Rent Collected |
| Net Rents |
| Average Rent |
| Physical |
| Turnover | ||||||||||||||||||||||
|
|
|
|
|
| per Unit (1) |
| per Unit (2) |
| per Unit (3) |
| Occupancy (4) |
| Ratio (5) | ||||||||||||||||||||||
|
| No. of |
| Average |
| Q1 |
| Q1 |
| % |
| Q1 |
| Q1 |
| % |
| Q1 |
| Q1 |
| % |
| Q1 |
| Q1 |
| Q1 |
| Q1 | ||||||
|
| Units |
| Age (6) |
| 2010 |
| 2009 |
| Change |
| 2010 |
| 2009 |
| Change |
| 2010 |
| 2009 |
| Change |
| 2010 |
| 2009 |
| 2010 |
| 2009 | ||||||
Midwest Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Indiana |
| 836 |
| 14 |
| $ | 790 |
| $ | 786 |
| 0.5% |
| $ | 852 |
| $ | 857 |
| (0.6)% |
| $ | 913 |
| $ | 908 |
| 0.6% |
| 95.2% |
| 94.9% |
| 42.1% |
| 45.5% |
Michigan |
| 2,888 |
| 19 |
| 704 |
| 720 |
| (2.2)% |
| 759 |
| 769 |
| (1.3)% |
| 838 |
| 836 |
| 0.2% |
| 95.1% |
| 95.8% |
| 42.5% |
| 45.8% | ||||||
Ohio - Central Ohio |
| 2,621 |
| 19 |
| 769 |
| 778 |
| (1.2)% |
| 815 |
| 819 |
| (0.5)% |
| 844 |
| 835 |
| 1.1% |
| 95.7% |
| 96.0% |
| 47.0% |
| 44.7% | ||||||
Ohio - Northeastern Ohio |
| 1,303 |
| 15 |
| 908 |
| 904 |
| 0.4% |
| 959 |
| 967 |
| (0.8)% |
| 1,019 |
| 1,012 |
| 0.7% |
| 97.0% |
| 95.5% |
| 45.1% |
| 46.4% | ||||||
Total Midwest Properties |
| 7,648 |
| 18 |
| 771 |
| 778 |
| (0.9)% |
| 822 |
| 830 |
| (1.0)% |
| 879 |
| 873 |
| 0.7% |
| 95.7% |
| 95.7% |
| 44.4% |
| 45.5% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Mid-Atlantic Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Baltimore/Washington |
| 667 |
| 24 |
| 1,250 |
| 1,213 |
| 3.1% |
| 1,318 |
| 1,329 |
| (0.8)% |
| 1,379 |
| 1,349 |
| 2.2% |
| 96.1% |
| 94.3% |
| 37.2% |
| 42.6% | ||||||
Virginia |
| 804 |
| 4 |
| 1,077 |
| 1,099 |
| (2.0)% |
| 1,159 |
| 1,174 |
| (1.3)% |
| 1,209 |
| 1,176 |
| 2.8% |
| 96.3% |
| 94.7% |
| 48.8% |
| 39.3% | ||||||
Total Mid-Atlantic Properties | 1,471 |
| 13 |
| 1,155 |
| 1,151 |
| 0.3% |
| 1,231 |
| 1,244 |
| (1.0)% |
| 1,286 |
| 1,254 |
| 2.6% |
| 96.2% |
| 94.5% |
| 43.5% |
| 40.8% | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Southeast Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Florida |
| 1,272 |
| 11 |
| 1,104 |
| 1,116 |
| (1.1)% |
| 1,185 |
| 1,230 |
| (3.7)% |
| 1,354 |
| 1,347 |
| 0.5% |
| 95.8% |
| 94.3% |
| 51.9% |
| 63.8% | ||||||
Georgia |
| 1,717 |
| 15 |
| 712 |
| 695 |
| 2.4% |
| 796 |
| 858 |
| (7.2)% |
| 992 |
| 980 |
| 1.2% |
| 92.4% |
| 84.7% |
| 56.6% |
| 63.8% | ||||||
Total Southeast Properties |
| 2,989 |
| 14 |
| 879 |
| 874 |
| 0.6% |
| 961 |
| 1,016 |
| (5.4)% |
| 1,146 |
| 1,136 |
| 0.9% |
| 93.9% |
| 88.8% |
| 54.6% |
| 63.8% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total/Average Same |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Community |
| 12,108 |
| 16 |
| $ | 844 |
| $ | 847 |
| (0.4)% |
| $ | 906 |
| $ | 926 |
| (2.2)% |
| $ | 994 |
| $ | 984 |
| 1.0% |
| 95.3% |
| 93.9% |
| 46.8% |
| 49.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
(1) | Represents gross potential rents less vacancies and allowances for all units divided by the number of units in a market. |
|
|
(2) | Represents gross potential rents less allowances for all units divided by the number of units in a market. |
|
|
(3) | Represents gross potential rents for all units divided by the number of units in a market. |
|
|
(4) | Represents physical occupancy at the end of the quarter. |
|
|
(5) | Represents the number of units turned over for the quarter, divided by the number of units in a market, annualized. |
|
|
(6) | Age shown in years. |
15 |
Associated Estates Realty Corporation |
|
|
|
| 2010 |
| 2009 |
| Q1 |
| Q1 |
|
|
|
| |||
|
| No. of |
| Physical |
| Physical |
| 2010 |
| 2009 |
| Increase/ |
| % | |||
Property Revenue |
| Units |
| Occupancy (1) |
| Occupancy (1) |
| Revenue |
| Revenue |
| (Decrease) |
| Change | |||
Same Community |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Midwest Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Indiana |
| 836 |
| 95.2% |
| 94.9% |
| $ | 2,046 |
| $ | 2,054 |
| $ | (8) |
| (0.4)% |
Michigan |
| 2,888 |
| 95.1% |
| 95.8% |
| 6,375 |
| 6,535 |
| (160) |
| (2.4)% | |||
Ohio - Central Ohio |
| 2,621 |
| 95.7% |
| 96.0% |
| 6,257 |
| 6,312 |
| (55) |
| (0.9)% | |||
Ohio - Northeastern Ohio |
| 1,303 |
| 97.0% |
| 95.5% |
| 3,668 |
| 3,636 |
| 32 |
| 0.9% | |||
Total Midwest Properties |
| 7,648 |
| 95.7% |
| 95.7% |
| 18,346 |
| 18,537 |
| (191) |
| (1.0)% | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Mid-Atlantic Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Baltimore/Washington |
| 667 |
| 96.1% |
| 94.3% |
| 2,552 |
| 2,468 |
| 84 |
| 3.4% | |||
Virginia |
| 804 |
| 96.3% |
| 94.7% |
| 2,662 |
| 2,778 |
| (116) |
| (4.2)% | |||
Total Mid-Atlantic Properties |
| 1,471 |
| 96.2% |
| 94.5% |
| 5,214 |
| 5,246 |
| (32) |
| (0.6)% | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Southeast Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Florida |
| 1,272 |
| 95.8% |
| 94.3% |
| 4,336 |
| 4,384 |
| (48) |
| (1.1)% | |||
Georgia |
| 1,717 |
| 92.4% |
| 84.7% |
| 3,750 |
| 3,657 |
| 93 |
| 2.5% | |||
Total Southeast Properties |
| 2,989 |
| 93.9% |
| 88.8% |
| 8,086 |
| 8,041 |
| 45 |
| 0.6% | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Total/Same Community |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Property Revenue |
| 12,108 |
| 95.3% |
| 93.9% |
| 31,646 |
| 31,824 |
| (178) |
| (0.6)% | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
(1) | Represents physical occupancy at the end of the quarter. |
|
|
16 |
Associated Estates Realty Corporation |
|
|
|
| 2010 |
| 2009 |
| Q1 |
| Q1 |
|
|
|
| |||
|
| No. of |
| Physical |
| Physical |
| 2010 |
| 2009 |
| Increase/ |
| % | |||
Property Operating Expenses |
| Units |
| Occupancy (1) |
| Occupancy (1) |
| Expenses |
| Expenses |
| (Decrease) |
| Change | |||
Same Community |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Midwest Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Indiana |
| 836 |
| 95.2% |
| 94.9% |
| $ | 913 |
| $ | 924 |
| $ | (11) |
| (1.2)% |
Michigan |
| 2,888 |
| 95.1% |
| 95.8% |
| 3,116 |
| 3,103 |
| 13 |
| 0.4% | |||
Ohio - Central Ohio |
| 2,621 |
| 95.7% |
| 96.0% |
| 2,837 |
| 2,769 |
| 68 |
| 2.5% | |||
Ohio - Northeastern Ohio |
| 1,303 |
| 97.0% |
| 95.5% |
| 1,390 |
| 1,448 |
| (58) |
| (4.0)% | |||
Total Midwest Properties |
| 7,648 |
| 95.7% |
| 95.7% |
| 8,256 |
| 8,244 |
| 12 |
| 0.1% | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Mid-Atlantic Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Baltimore/Washington |
| 667 |
| 96.1% |
| 94.3% |
| 945 |
| 884 |
| 61 |
| 6.9% | |||
Virginia |
| 804 |
| 96.3% |
| 94.7% |
| 899 |
| 937 |
| (38) |
| (4.1)% | |||
Total Mid-Atlantic Properties |
| 1,471 |
| 96.2% |
| 94.5% |
| 1,844 |
| 1,821 |
| 23 |
| 1.3% | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Southeast Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Florida |
| 1,272 |
| 95.8% |
| 94.3% |
| 1,893 |
| 1,906 |
| (13) |
| (0.7)% | |||
Georgia |
| 1,717 |
| 92.4% |
| 84.7% |
| 1,931 |
| 1,783 |
| 148 |
| 8.3% | |||
Total Southeast Properties |
| 2,989 |
| 93.9% |
| 88.8% |
| 3,824 |
| 3,689 |
| 135 |
| 3.7% | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Total/Same Community |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Property Operating Expenses |
| 12,108 |
| 95.3% |
| 93.9% |
| 13,924 |
| 13,754 |
| 170 |
| 1.2% | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
(1) | Represents physical occupancy at the end of the quarter. |
17 |
Associated Estates Realty Corporation |
|
|
|
| 2010 |
| 2009 |
| Q1 |
| Q1 |
|
|
|
| |||
|
| No. of |
| Physical |
| Physical |
| 2010 |
| 2009 |
| Increase/ |
| % | |||
Property NOI (1) |
| Units |
| Occupancy (2) |
| Occupancy (2) |
| NOI |
| NOI |
| (Decrease) |
| Change | |||
Same Community |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Midwest Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Indiana |
| 836 |
| 95.2% |
| 94.9% |
| $ | 1,133 |
| $ | 1,130 |
| $ | 3 |
| 0.3% |
Michigan |
| 2,888 |
| 95.1% |
| 95.8% |
| 3,259 |
| 3,432 |
| (173) |
| (5.0)% | |||
Ohio - Central Ohio |
| 2,621 |
| 95.7% |
| 96.0% |
| 3,420 |
| 3,543 |
| (123) |
| (3.5)% | |||
Ohio - Northeastern Ohio |
| 1,303 |
| 97.0% |
| 95.5% |
| 2,278 |
| 2,188 |
| 90 |
| 4.1% | |||
Total Midwest Properties |
| 7,648 |
| 95.7% |
| 95.7% |
| 10,090 |
| 10,293 |
| (203) |
| (2.0)% | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Mid-Atlantic Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Baltimore/Washington |
| 667 |
| 96.1% |
| 94.3% |
| 1,607 |
| 1,584 |
| 23 |
| 1.5% | |||
Virginia |
| 804 |
| 96.3% |
| 94.7% |
| 1,763 |
| 1,841 |
| (78) |
| (4.2)% | |||
Total Mid-Atlantic Properties |
| 1,471 |
| 96.2% |
| 94.5% |
| 3,370 |
| 3,425 |
| (55) |
| (1.6)% | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Southeast Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Florida |
| 1,272 |
| 95.8% |
| 94.3% |
| 2,443 |
| 2,478 |
| (35) |
| (1.4)% | |||
Georgia |
| 1,717 |
| 92.4% |
| 84.7% |
| 1,819 |
| 1,874 |
| (55) |
| (2.9)% | |||
Total Southeast Properties |
| 2,989 |
| 93.9% |
| 88.8% |
| 4,262 |
| 4,352 |
| (90) |
| (2.1)% | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Total/Same Community |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Property NOI |
| 12,108 |
| 95.3% |
| 93.9% |
| 17,722 |
| 18,070 |
| (348) |
| (1.9)% | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
(1) | See page 23 for a reconciliation of net (loss) income attributable to AERC to this non-GAAP measurement and for the Company's definition of this non-GAAP measurement. |
|
|
(2) | Represents physical occupancy at the end of the quarter. |
18 |
Associated Estates Realty Corporation |
| Balance |
| Percentage |
| Weighted | |
| Outstanding |
| of |
| Average | |
| March 31, 2010 |
| Total Debt |
| Interest Rate | |
FIXED RATE DEBT |
|
|
|
|
| |
Mortgages payable - CMBS | $ | 99,656 |
| 21.0% |
| 7.7% |
Mortgages payable - other (1) | 295,092 |
| 62.0% |
| 5.8% | |
Unsecured debt | 25,780 |
| 5.4% |
| 7.9% | |
Total fixed rate debt | 420,528 |
| 88.4% |
| 6.4% | |
|
|
|
|
|
| |
VARIABLE RATE DEBT |
|
|
|
|
| |
Mortgages payable | 34,711 |
| 7.3% |
| 4.7% | |
Unsecured revolving credit facility | 20,400 |
| 4.3% |
| 2.4% | |
Total variable rate debt | 55,111 |
| 11.6% |
| 3.8% | |
TOTAL DEBT | $ | 475,639 |
| 100.0% |
| 6.1% |
|
|
|
|
|
| |
Interest coverage ratio (2) | 1.59:1 |
|
|
|
| |
Fixed charge coverage ratio (3) | 1.42:1 |
|
|
|
| |
Weighted average maturity | 7.4 years |
|
|
|
| |
| Fixed Rate |
| Fixed Rate |
|
|
|
| ||||
SCHEDULED PRINCIPAL MATURITIES | CMBS |
| Other |
| Variable Rate |
| Total | ||||
|
|
|
|
|
|
|
| ||||
2010 | $ | - |
| $ | 21,000 |
| $ | - |
| $ | 21,000 |
2011(4) | 54,287 |
| - |
| 20,400 |
| 74,687 | ||||
2012 | 45,369 |
| 36,000 |
| - |
| 81,369 | ||||
2013 | - |
| 132,209 |
| - |
| 132,209 | ||||
2014 | - |
| 44,538 |
|
|
| 44,538 | ||||
Thereafter | - |
| 87,125 |
| 34,711 |
| 121,836 | ||||
Total | $ | 99,656 |
| $ | 320,872 |
| $ | 55,111 |
| $ | 475,639 |
|
|
|
|
|
|
|
| ||||
(1) | Includes $21,000 of variable rate debt swapped to fixed. |
|
|
(2) | Is calculated as EBITDA divided by interest expense, including capitalized interest and amortization of deferred financing costs and excluding defeasance and/or other prepayment costs/credits. See page 22 for a reconciliation of net (loss) income available to common shares to EBITDA and for the Company's definition of EBITDA. |
|
|
(3) | Represents interest expense and preferred stock dividend payment coverage, including capitalized interest and excluding defeasance and/or other prepayment costs/credits. |
|
|
(4) | Includes the Company's unsecured revolving credit facility. |
19 |
Associated Estates Realty Corporation |
This table includes forward-looking statements based on current judgments and current knowledge of management, which are subject to certain risks, trends and uncertainties that could cause results to vary from those projected. Please see the paragraph on forward-looking statements on page 2 of this document for a list of risk factors.
Earnings Guidance Per Common Share |
|
|
Expected net (loss) income attributable to AERC |
| $-0.44 to $-0.38 |
Expected real estate depreciation and amortization |
| 1.51 |
Expected net defeasance costs (credits) |
| -0.02 |
Expected preferred share dividends |
| -0.19 |
Expected gains on disposition of properties/gain on insurance recoveries |
| 0.00 |
Expected Funds from Operations as Adjusted (1) |
| $0.86 to $0.92 |
|
|
|
Same Community Portfolio |
|
|
Revenue growth |
| -0.75% to -0.25% |
Expense growth |
| 2.75% to 3.75% |
Property NOI (2) growth |
| -4.0% to -2.5% |
Physical occupancy |
| 93.0% to 94.0% |
|
|
|
Transactions (3) |
|
|
Acquisitions |
| $0 million |
Dispositions |
| $0 million |
Development (4) |
| $2.0 million |
|
|
|
Corporate Expenses |
|
|
General and administrative expense |
| $13.9 million |
Service company expense (5) |
| $0.3 million |
Total |
| $14.2 million |
|
|
|
Debt |
|
|
Capitalized interest (4) |
| $0.1 million |
Expensed interest (excluding defeasance costs (credits)) (6) |
| $32.0 million |
Expected net defeasance costs (credits) |
| $(0.6) million |
|
|
|
Capital Structure (7) |
|
|
Common share issuances (8) |
| $54.9 million |
Common share repurchases |
| $0 million |
Preferred share repurchases |
| $0 million |
(1) | See page 21 for the Company's definition of this non-GAAP measurement. |
|
|
(2) | See page 23 for the Company's definition of this non-GAAP measurement. |
|
|
(3) | Earnings guidance does not take into consideration any asset sales or acquisitions. |
|
|
(4) | Reflects development of 60 units on adjacent parcel in Richmond, Virginia, with an expected completion date of June 30, 2010. |
|
|
(5) | Excludes salaries and benefits reimbursed in connection with the management of properties for third parties which are grossed up in fees, reimbursements and other and direct property management and service company expense in accordance with GAAP. |
|
|
(6) | Includes $1.3 million of deferred financing costs. |
|
|
(7) | Earnings guidance does not take into consideration any additional share issuances or share repurchases. |
|
|
(8) | Reflects issuances of 5,175,000 shares on January 15, 2010 at a net of $10.60 to the Company. |
20 |
Associated Estates Realty Corporation |
This supplemental includes certain non-GAAP financial measures that the Company believes are helpful in understanding our business, as further described below. The Company's definition and calculation of these non-GAAP financial measures may differ from those of other REITs, and may, therefore, not be comparable.
Funds from Operations ("FFO")
The Company defines FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"). This definition includes all operating results, both recurring and non-recurring, except those results defined as "extraordinary items" under GAAP, adjusted for depreciation on real estate assets and amortization of intangible assets, gains on insurance recoveries and gains and losses from the disposition of properties and land. FFO does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flow as a measure of liquidity. The Company generally considers FFO to be a useful measure for reviewing the comparative operating and financial performance of the Company because FFO can help one compare the operating performance of a company's real estate between periods or as compared to different REITs.
Funds from Operations ("FFO") as Adjusted
The Company defines FFO as adjusted as FFO, as defined above, plus the add back of defeasance and/or other prepayment costs/credits of $(554,000) and $(563,000) for the three months ended March 31, 2010 and March 31, 2009, respectively. In accordance with GAAP, these prepayment costs/credits are included as interest expense in the Company's Consolidated Statement of Operations. The Company is providing this calculation as an alternative FFO calculation as it considers it a more appropriate measure of comparing the operating performance of a company's real estate between periods or as compared to different REITs.
Funds Available for Distribution ("FAD")
The Company defines FAD as FFO as adjusted, as defined above, plus depreciation other and amortization of deferred financing fees less recurring fixed asset additions. Fixed asset additions exclude development, investment, revenue enhancing and non-recurring capital additions. The Company considers FAD to be an appropriate supplemental measure of the performance of an equity REIT because, like FFO and FFO as adjusted, it captures real estate performance by excluding gains or losses from the disposition of properties and land and depreciation on real estate assets and amortization of intangible assets. Unlike FFO and FFO as adjusted, FAD also reflects the recurring capital expenditures that are necessary to maintain the associated real estate.
21 |
Associated Estates Realty Corporation |
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")
EBITDA is defined as earnings before interest, taxes, depreciation and amortization. The Company considers EBITDA to be an appropriate supplemental measure of our performance because it eliminates depreciation and interest which permits investors to view income from operations unclouded by non-cash depreciation or the cost of debt. Below is a reconciliation of net (loss) income available to common shares to EBITDA.
|
| Three Months Ended | ||||
|
| March 31, | ||||
(In thousands) |
| 2010 |
| 2009 | ||
|
|
|
|
| ||
Net (loss) income applicable to common shares |
| $ | (3,956) |
| $ | (936) |
Preferred share dividends |
| 1,050 |
| 1,049 | ||
Interest income |
| (9) |
| (15) | ||
Interest expense (1) |
| 8,061 |
| 8,213 | ||
Depreciation and amortization |
| 8,620 |
| 9,466 | ||
Gain on disposition of properties |
| - |
| (2,278) | ||
Taxes |
| 78 |
| 74 | ||
|
|
|
|
| ||
Total EBITDA |
| $ | 13,844 |
| $ | 15,573 |
|
|
|
|
| ||
(1) | 2010 includes a defeasance credit of $(554) and 2009 includes a defeasance credit of $(563) for refunds of defeasance costs for previously defeased loans. |
Net Operating Income ("NOI")
NOI is determined by deducting property operating and maintenance expenses, direct property management and service company expense and construction and other services expense from total revenue. The Company considers NOI to be an appropriate supplemental measure of our performance because it reflects the operating performance of our real estate portfolio and management and service company at the property and management service company level and is used to assess regional property and management and service company level performance. NOI should not be considered an alternative to net income as a measure of performance or cash generated from operating activities in accordance with GAAP and, therefore, it should not be considered indicative of cash available to fund cash needs.
22 |
Associated Estates Realty Corporation |
Property Net Operating Income ("Property NOI")
Property NOI is determined by deducting property operating and maintenance expenses from total property revenue. The Company considers Property NOI to be an appropriate supplemental measure of our performance because it reflects the operating performance of our real estate portfolio at the property level and is used to assess regional property level performance. Property NOI should not be considered an alternative to net income as a measure of performance or cash generated from operating activities in accordance with GAAP and, therefore, it should not be considered indicative of cash available to fund cash needs. The following is a reconciliation of Property NOI to total consolidated net (loss) income attributable to AERC.
Recurring Fixed Asset Additions
The Company considers recurring fixed asset additions to a property to be capital expenditures made to replace worn out assets so as to maintain the property's value.
Investment/Revenue Enhancing and/or Non-Recurring Fixed Asset Additions
The Company considers investment/revenue enhancing and/or non-recurring fixed assets to be capital expenditures if such improvements increase the value of the property and/or enable the Company to increase rents.
Same Community Properties
Same Community properties are conventional multifamily residential apartments which were owned and operational for the entire periods presented.
23 |